The New Normal That the Pandemic Will Unleash on Business

Krishnan Ramanujam

President, Business & Technology Services, TCS

The coronavirus pandemic has forced every large company to move knowledge work from their offices to their employees’ homes. Right now, everyone is wondering how long it will take for the virus to subside and for work – and the economy – to return to normal. But there’s another question that corporate leaders need to ask: What might not and should not return to normal? What new ways of operating in the time of the virus might be superior to the old routines?

Simply put, what might be the “new normal”?

This article presents seven fundamental changes that I believe are likely to happen post-pandemic:

Firms will compete for customers based on the quality of remote worker support

Agile teams will operate in many geographies, rarely in the same room

Tracking products delivered to homes will become urgent

Digital business models will become the only viable models in many sectors

New leadership skills will be required to run increasingly virtual global companies

Everyone knows how bad things are. There’s no way to sugar-coat it or avoid talking about it in our companies. Tens of thousands of people have already died from a scourge the world didn’t know about until this January1. Four months later, the coronavirus globally has been found to infect more than 1.1 million people around the world, ending the lives of nearly 65,000 as of this writing. 2

In India, my home country, Prime Minister Narendra Modi has put our nation on a 21-day lockdown – the world’s largest shutdown given our 1.3 billion people. This is tough, but necessary, medicine. And economists believe that a side effect of this medicine will be a deep worldwide recession.

The only way my TCS colleagues and I know how to deal with all this is to leverage the capabilities, energy, and ingenuity of our 400,000 people, guided by our overriding concerns for their health and economic well-being. TCS’ leaders are guided by our faith, our confidence in each other, and the skills we have gained in overcoming previous economic crises.

We are also blessed to operate within the beneficent culture of our parent company, the Tata Group. In its 152-year history, our parent company has weathered pandemics, depressions, world wars, and other catastrophes. Through it all, Tata Group has endured and thrived, as its more than $100 billion in revenue shows.

But our corporate DNA doesn’t let us think past success guarantees future success, which I believe is a key reason the company is here more than a century and a half after our founder, Jamsetji Tata, built his first business, a textile mill.

In fact, we believe that the past has truly passed, and that many of the ways leaders think about and run their businesses will not “go back to normal.” And that is a good thing. The pandemic has forced firms to adopt more productive ways of operating and accelerate productivity programs already in motion.

Right now, I see seven fundamental changes that leaders must embrace even after the pandemic recedes and the global economy gets back on track. These changes will become the new normal.

The 7 Characteristics of the New Normal

No. 1: Attending to the physical and emotional well-being of the workforce becomes essential to running a financially healthy business

The spread of the coronavirus illustrates how not knowing in granular detail about health issues in any part of the workforce can lead to disaster everywhere. This understanding is especially critical for companies with hundreds or thousands of people in far flung locations, where any one can become an incubator spreading disease.

This was the experience of a Boston company that held a strategic planning meeting in late February for around 175 of its executives from all over the globe. These executives went to other conferences in other places, meeting other executives from other companies3. Since then, more than 100 virus cases have been tied to that strategic planning meeting. Of course, the firm had no idea of the danger that lurked at its offsite4.

Long after the pandemic ends, many people will not want to work in large offices. And many companies will be reluctant to assume the risk of bringing many people together in one place. Addressing the emotional health of their people is something that business leaders must focus on, and that includes their very real fear of losing their jobs. (In the last two weeks, 10 million jobs in the United States have been lost.)

Leaders need to understand that a fearful workforce will require their understanding and support.

Employee attitudes, affected by their emotions, directly impact how they deal with customers. Research by Gallup confirms this. Companies with the highest levels of employee engagement have stronger customer engagement, higher productivity, better retention, and 21% greater profitability than companies with the lowest levels of engagement5. In turn, customers who have a strong emotional connection to a supplier are 23% more valuable (in terms of share of wallet, profitability, revenue and relationship growth) to that company than its average customer6. Employee interactions color how customers view a company. As the great Walt Disney put it, “You can dream, create, design, and build the most wonderful place in the world … but it requires people to make the dream a reality7.”

No. 2: Remote work becomes the default option for many jobs, not the exception

The trend toward working at home has gone from a trickle to a flood. In the United States in 2018, 3.6% of the workforce – 5 million people -- worked from home at least half time, according to Global Workplace Analytics, drawing on U.S. Census Bureau data. Since 2005, the number of such regular at-home workers increased 173%8.

Numerous companies, many of them small but some sizable, now have largely remote workforces. Take Automattic Inc., the San Francisco-based owner of the popular website content management system WordPress. It is the platform for an estimated 455 million sites (35% of all Internet sites)9. All of the company’s 1,172 employees work out of their homes in 75 countries-10. No one goes to an office.

When the pandemic ebbs, and the economy returns to something like normal, many people will go back to jobs at factories, distribution centers, stores, offices, government buildings, and other workplaces. But a significant percentage will remain in their homes. Clearly, a great deal of knowledge work – plotting business or marketing strategy, writing marketing copy or technical manuals, analyzing research data, monitoring computer systems, and much more – can be done remotely. And, if it can, it will be.

Even the work of building or monitoring a company’s computer systems no longer needs to be conducted in secure development centers. Companies like ours are baking security into our remote workers’ technological environments.

No. 3: Firms with superior support for remote workers will take talent and customers from firms focused on office environments.

The pandemic shows that many employees are more productive at home than they were at the office. Professional services, media, education, and many other industry segments are operating with employees at home, and not missing a beat. Their workers are not spending time commuting; they don’t need to “settle in.” They can do their jobs from anywhere with an Internet connection.

Companies that can operate without people going to the office will gain a competitive advantage over firms that cannot. This is the new foundation of business continuity, and all businesses will move quickly to shutter offices as quickly as possible. Companies that can ensure their at-home workers are highly productive will maintain the edge. This especially will be true for employees involved in mission- and time-critical projects that must rapidly tap the expertise of people around the world.

The way medical researchers are working to find treatments and cures for Covid-19 is a good illustration. Researchers from different organizations in different countries are collaborating virtually through online databases of studies, articles, and data. They have shared hundreds of viral genome sequences. Advances become known in hours. A New York Times article recently cited how the news of a potential vaccine was shared on a World Health Organization conference call. “Today’s technology and the pace of information-sharing dwarfs what was possible three decades ago,” wrote the reporter11.

Leaders should expect that their best people will want to work from home after the economic rebound begins. Whether their job is developing a new product, coming up with a marketing campaign, or recruitment, company leaders will have to figure out how to bring the company’s work to their employees’ homes effectively and efficiently. And they will have to support them, at home, where the firm’s critical work will get done.

No. 4: Agile teams operate at a remove

If you believe your company must increasingly go to where the talent is, and enable them to work and thrive from their homes, the next step (after equipping them with technology and other support) is to help them work with their peers using agile methods.

The agile movement has been gathering speed since 2001, when 17 software developers met in Snowbird, Utah, to draw up a set of principles that would change how their work was accomplished. Since then, agile methodologies have moved outside the IT group. Companies whose business processes are, in fact, web systems, have been among the heaviest adopters of agile methods.

But now is when the biggest shift in agile methods is occurring. The agile methodology first stipulated that team members had to be in the same room. Today, this is neither possible nor desirable. But companies like ours have been using remote agile teams for years. We call our version “location-independent agile,” and have been using it with great success for several years12.

So have a growing number of companies, among them Dutch banking giant ABN AMRO (which has used agile methods to cut more than 80% out of the time it takes to stand up new digital services or service updates) and online music company Spotify (using agile methods to grow from zero to $7 billion in annual revenue since 200813.

For big companies, where agile team members are located can no longer matter.

The pandemic has dramatically increased the number of products that companies and retailers are shipping to people’s homes. We doubt that e-commerce – which has been rising relentlessly since Amazon opened up its online shop in July 199514 — will decline once the pandemic ends. But the increase will heighten the risk in the “last mile” of the supply chain: the trip that companies take to deliver goods to people’s homes and businesses.

Having many more products shipped to homes opens up the possibility that those goods may be hijacked, substituted with fake goods, or will spoil (if perishable) before they arrive. In 2017, packages were stolen at 19% of U.S. households (average value of $140 per package), according to one report15.

The antidote to this is technology that monitors the movements of goods and materials in the supply chain, and the people, and money that flow through it. That technology includes digital sensors on trucks, packages, and drivers’ cellphones. It also includes blockchain software so that items and digital payments can be tracked or audited at minute levels to find out if or where things have gone astray.

Payments must also become a transaction in which neither paper nor plastic moves from hand to hand. The coronavirus can live for up to three days on plastic surfaces such as credit cards16. Paper, also, can transmit germs. Studies at New York University found bacteria linked to pneumonia, staph and food poisoning on dollar bills17. But hand-to-hand transactions are also slow and difficult to monitor. Contactless payments, whether at stores or with shipments at your door, will soon go mainstream.

No. 6: Digital business models become the only business model in some sectors

We saw over the last decade how products and services in a number of industries moved from atoms to bits: media (newspapers, movies, books, magazines), financial services (payments, mortgage applications, car loans), cameras and film, real estate marketing (apps like Zillow in the United States for seeing homes for sale in neighborhoods), and maps (Google), among them.

For reasons of safety and convenience, the pandemic is accelerating the adoption of products and services that can be fully delivered digitally, and it is also raising questions about whether their physical versions will survive.

Will the $41 billion global movie theater industry be able to attract customers when theaters re-open?18 In March, in the United States, the percentage of adults who preferred streaming a first-run movie at home rather than at a movie theater surpassed the percentage of those who preferred the theater, 50% to 37%. Just four months earlier, 53% preferred the theater19.

The pandemic will quicken the shift to fully digital business models in banking, insurance, medicine, and retail, among others. And these businesses will need to develop the after-sale support work to keep physical products running, with digital technology to monitor their condition, employing software and AI to make corrections and adjustments.

If companies whose products and services can be digitized are not about how they can do that, if they’re not thinking about their future in terms of cross-industry collaboration in “digital ecosystems,” their prospects post-coronavirus are unlikely to be good20.

No. 7: A new (and old) set of leadership skills

Thinking about your business in these new ways, and managing more people in a virtual operating environment, will test all leaders. To drive our companies into the digital future faster, leaders will need to learn new tricks and get better at some old ones, too.

Some of the newer capabilities we’ll need to develop will be the most important. The top one is creating a workplace culture that is exciting and supportive in an increasingly virtual world. If we’re not working in the same space, how do we keep those vital personal bonds, those human connections, vital and strong?

Right now, I don’t think anyone has all the answers. The coronavirus pandemic has shocked everyone. We are all working apart now, trying to maintain the same ties – business and emotional – that we had when we worked together.

To succeed, we must exercise empathy, to appreciate the difficulties our colleagues and employees are experiencing, and patience, to avoid reacting hastily to electronic signals we could be misinterpreting. And we must seek to bridge the physical distance between us by offering unstinting encouragement for all who are doing their best in these most difficult times.

A Winding Path Ahead

Our societies and businesses will all eventually find a path out of these dark times. Our companies and everyone who works for them will learn to operate in initially uncomfortable but ultimately more productive digital ways.

As Winston Churchill once said, “Difficulties mastered are opportunities won.” The difficulties that lie ahead for all of us are likely to be extremely trying, in our businesses and our homes. But my colleagues are eager to help each other, our workforce, our clients, and our families get through the storm. For it, too, will pass, and life, work and joy will return.